Do you know at what age you’ll finally get some state supplied weekly lucre? (WASPIs please don’t answer!) N.b. some sources say retirees will be written to, inviting a claim; others say it’s entirely up to the would-be retiree to instigate their claim. Similarly, do you know how many (qualifying) years of National Insurance payments (NIPs) you will need to get the full New State Retirement Pension (NSRP)? Hard luck if you’re already retired and are getting the much lower ‘Old’ State Retirement Pension, possibly even with some State Earnings Related Pension Scheme (SERPS) added. Try starting a campaign for pension equality as I doubt anyone will oppose you – except of course the Treasury and Millennials, who probably want you dead as soon as possible – ideally with ‘their’ inheritance still largely intact.
Let’s not talk about the minefields that are contributory private pensions. The state giveth with one hand and readily taketh back with the other. ‘Save for your retirement, we’ll make it worth your while by giving you tax advantages. Don’t however read the small print – when your private pension pot has grown and you access it, then we’ll then tax it – even if you end up worse off than those who acquired all the necessary NI credits by never working or paying any tax (rest assured your tax in retirement will help those more idle, or in our opinion more deserving, than yourself)’ said no government minister ever.
Also let’s steer clear of the ‘Opting Out’ phenomenon or do I mean, for many, the ‘Opting Out’ con? You may find out, but only if you check, that you have been living a lie by possibly, sometimes unbeknown to yourself, having been opted out of paying the full whack of NI with the ‘saving’ going into a private pension pot. It will be a nice retirement hobby for many trying to track this down and get hold of it. But don’t worry, if your private pension pot has done well, when it’s added to your NSRP then anything over your basic ungenerous personal tax allowance will be taxed at the appropriate rate. Please don’t stop to consider NSRP contrasts with the National Basic Minimum Wage or the mystery of Universal Benefit, you’re now a crinkly-wrinkly with a limited shelf life, so calm down dear!
There are those who think they know their entitlements inside out, yet still believe that anyone must have 40 years of NIPs to get a State Pension, except of course those living in the loving arms of the state and getting their ‘dole’, everything else going free plus NI credits. This leads seamlessly to a no questions asked full NSRP once they ‘retire’ from their chosen ‘profession’. And of course, not having had the (legal) chance to set aside any additional pension nest egg, they’ll probably still get additional goodies on top. What’s not to like?
The media though would now have you believe that a more doable 35 (qualifying) NIPs years is all that is required for a full NSRP – think again, you’re behaving like an economic migrant with your self-entitlement beliefs! I’ve had it officially confirmed that I have 35 qualifying NIP years, yet for reasons that remain a mystery to me, and which certainly aren’t explained in the letter in terms that I can understand (‘Legacy’ rules anyone?), I will still get £30 a week less than the full NSRP.
Please, when you get to your mid 60s (it can be done online, assuming you successfully register for an account – I can’t as the system refuses to recognise me and suggests that I ‘phone instead. No thanks, the wait times and cut off calls after waiting over an hour on hold look designed to ensure I expire before I actually reach 66) write to The Pension Service. You’ll have to find the relevant address yourself as I think there are different regional branches. Ask (A) How many qualifying years of NIPs do I already have? and (B) How much per week will my NSRP be, based on these years? Don’t assume that you’ll still be working and paying NI until you reach your requisite state retirement age – unexpected things can happen. Their reply will probably take several weeks to hit your doormat.
Like me, you may get an unpleasant surprise and learn that whilst you have 35, or even more, full NIP qualifying years of contributions, that’s still not enough to get your worn-out hands on the full NSRP of (currently) £221.20 a week, whatever MSM Finance columns now routinely, and misleadingly, state.
Now the reason you need to know this a minimum of one year in advance of your NSRP, is that something can sometimes be done (N.b. it’ll cost you of course) if you’re not scheduled to get the maximum NSRP available – and the sooner you know, the cheaper that something can be. If you only find out on the eve of your retirement, then frankly you’re screwed – it’s probably too late?
It’s possible for some pre-retirement age people (maybe not all?) to purchase voluntary additional backdated NIP years of contributions, but these have a limited shelf life so you can’t buy any missing / unqualifying years from the distant past. Your projection letter will tell you more about this plus the effect each newly bought year will have on your weekly pension. But this being ‘an official letter’, it doesn’t employ joined up thinking and tell you which years you can still acquire or their cost. No, you must write to another supplied address and ask this yourself, and again wait for the reply .
Finally, I’ve received information on which NI contribution years I can still retrospectively buy – but beware – several further readings of the first and second letters are required to make a sound financial decision (there are ‘traps’ for the unwary). For me it’s madness not to shell out c.£4,000 and recoup via receipt of the maximum NSRP.
Martin Rispin has had a career in many different sectors, most lately in the fields of English Tourism and Heritage based Urban Regeneration. He now lives, retired, in Kingston upon Hull.
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Thanks, this is such sound advice that everyone in their 60s and not yet receiving their State Pension ignores at their peril.